How to avoid losing your edge in B2B SaaS?

It hurts my heart when I see high-potential SaaS vendors slowly lose their edge.

I think we’ve all seen the examples. And you wonder: What happened? How could this have gone wrong?

That’s what I aim to explore with this blog.

Let’s start with my own experiences. I know there are many reasons why things can go south. One, however, that I’ve seen particularly hurtful is when a great idea pops up, and then, without even realizing it, we tone it down until it becomes mediocre…

  • We think ‘it will do,’ it will fly when we launch it.
  • We want to deliver all the other things on our roadmap as well
  • We don’t have the resources ‘to do it all.’
  • …or simply because we hugely underestimated the effort and cut off at the release date

Without realizing this becomes the default mentality: Damage done. There will never be enough resources. There will never be enough time. And …. we cannot please everyone. And to go around that, it’s about staying true to who and what you stand for. And that’s about:

  • …deeply understanding what holds your customers back
  • …uncover which problem would be most valuable and critical for them to solve
  • …understanding how you can solve it in a way that helps them make a meaningful difference,
  • …and keeping your promise.

But beyond that, it’s about mindset. And one quote that I’ve always loved to start on the right foot is this one:

“The greatest danger for most of us is not that our aim is too high, and we miss it. ….but that it’s too low and we make it.”

This ancient wisdom still holds massive value today – possibly even more than ever before, especially in B2B SaaS. It’s what makes our profession so fascinating. However, as with many things, this is easier said than done. Below I’ve outlined 5 areas to reflect upon. So let’s dig into this.

Reflection 1 – Is your software business as good as you think it is?

As an extension to my book, I’ve created an assessment to help tech-entrepreneurs challenge their business from 30 different angles. In a recent Mastermind session with 7 CEOs, we zoomed in on one area: Trait #5: Create new value possibilities. Asking the question: ‘How do you believe your SaaS company scores against this trait?’, the answers surprised me: Many  8s, 9s, and even 10s.

Then disbelief kicked in. Was it bias? Was it an unwillingness to open their kimonos?  It’s so easy to tap yourself on the back and think ‘We’re great’, right? Especially as this is the essence of what we do.

Normally the session continues with ‘how to close the Gap’ i.e. shift from a meager 5 or 6 to a clear 10. Obviously, this time was going to be different.

But just because the scores were so high, it didn’t mean there was nothing to learn. On the contrary. Pretty soon the realization came that high scores don’t automatically mean high (enough) market adoption. What followed was a highly energetic conversation full of Aha’s and areas to unpack and act upon.

Key takeaway: Too often we look at things in isolation and think we’re ‘done.’ However, it’s when we start connecting the dots with the bigger picture that we unveil the truth and have unique opportunities to create real value.

What’s next is answering the question: How do we leverage that unique opportunity and going back to that ancient proverb above: Are we aiming high enough? And would need to be different to achieve this?

That’s where courage comes in.

Reflection 2 – Disrupting our own software business… or leaving the honor to a competitor?

What keeps me thinking a lot is what are the defining moments where once-famous software businesses go south. How is it possible that they don’t manage to bend the curve upwards when the signals are getting clear the top line is flattening? Why don’t they allow themselves to do the things that would potentially disrupt their own business, instead of leaving that ‘honor’ to our competitors?

All pretty obvious questions – but they appear to be harder to answer when you’re in the heat of it. One thing I continuously see harm business software companies is the urge to ‘hold on to the familiar’ – reluctant to make key decisions because it would hurt their existing business. The idea of cannibalizing is just too much.

That reluctance is felt everywhere.

  • …in embracing new technologies.
  • …in embracing new business models
  • …in developing functionality competing with another business unit
  • …in making ”end of life” decisions (and accepting the tough consequences that go with it)
  • …etcetera

I’ve experienced this from very close as at some point I got heavily involved with managing the extensive (+250) product portfolio at Unit4.

Just the endless discussions with the leadership team about the BCG matrix and getting agreement whether a product was a Star, Question Mark, Cash cow or …. dog. There was always another ‘valid’ argument why one product actually belonged to a higher-valued box (and never the opposite).

What I’ve learned is that very often the reluctance to make the right decision has nothing to do with what’s best long-term for the customer, but with what’s best for the short-term for the business. So is it reluctance? Or is it on purpose? Is it selfishness?

Fact is – and history is very clear on this: if we don’t bite that bullet ourselves, someone outside our business will be honored to do so. What if we’d make those decisions as if we’d had a clean sheet – without the worry about sunk cost, internal politics, or complacency? Yes, that’s hard – because sometimes you don’t even see the clear signals why you should.

What’s more – and I realize that all too well – often the mountain of work to be done seems so big, complex and overwhelming, that we settle for incremental or don’t make a decision at all. Think twice…

Reflection 3 – Creating leverage instead of asking for ‘more people’

The past week I’ve had a range of deep conversations with B2B SaaS entrepreneurs around the challenge of keeping up with market expectations to create new value possibilities.

What I took away: The challenge is more a mindset thing than it is a money or resource thing. One big lesson I learned throughout my career: There will never be enough resources. No matter if you employ 5, 50, 500, or 5000 people, you’ll always hear: ‘We need more people’. It’s short-sighted and profit-draining. So with ‘more’, you are not going to solve the problem.

Here’s why – what we often forget is the importance of creating leverage. Auren Hoffman’s quote in episode 200 of my weekly podcast is telling:

Well, one thing that companies don’t think about enough, is how to get leverage. Most companies are focused on just throwing people at the problem, and not getting much leverage. If you think of a simple but important metric: Revenue/ARR/MRR per employee – for many companies, that number does not go up over time. And really, for every great company, that metric should go up over time. 

Having extra people in your company is how a lot of companies will talk about their success. To me, that’s a failure. Every time you hire somebody, it is going to be harder to communicate internally. Even the best companies in the world have some sort of communication problem every time they hire someone. And the worst companies in the world have an exponential communication problem every time they hire somebody. 

So you should do everything possible to figure out how to hire as few people as possible. And that means you probably need to hire better people, spend more money around them, and make them grow leverage. 

Leverage has many faces. The way to go is to be smart about it. Here are some angles that I have seen work again and again:

  • …stay resourceful to have the flexibility to do what’s needed to move the next needle (and say no to the rest)
  • …be mindful about the composition of your team(s) (diversity matters)
  • …have a clear mission you send them on (and leave the comfort zone)
  • …protect your business from becoming led by the short-term
  • …avoid becoming too heavily dependent on a few number of customers
  • …make crystal clear choices who you are really for and not for
  • …leverage customer data to grow the value flywheel of your solution
  • …secure defensible differentiation

Honestly, challenge this and you’ll find gold. Approaching it this way, a lot of small changes can accumulate in a lot of value.

Tip: The book ‘A Beautiful Constraint‘ is providing some great exercises that will give you breakthroughs in thinking. In particular, the exercise around the question “We can, if….” is always an eye-opener because it will help you get beyond the excuses, and why things won’t work.

And that brings me to another aspect that’s critical in building an edge, and keep in it. And that’s the energy you’re able to create behind your business. That’s about having the gut to take position.

Reflection 4 – Being clear about what you are rebelling against

I just love this question! Why? Because it’s so powerful to help clarify what your software business is really all about. Your business is not about ERP, CRM, HCM, AI, or whatever acronym you can think of. It’s about the meaningful change you create for your customers. And this means: The change that will help them make a difference and accelerate the trajectory of their business.

Change is about overcoming obstacles – the hurdles that prevent our customers to achieve what they aspired to. The art is in clarifying what the root cause of your customers’ biggest problem really is. And then aim to personify this.

Sebastiaan van der Lans, CEO of Wordproof articulated this perfectly in episode 200 of my podcast:

“You must declare war on a specific problem. So for example, the trusted web is about declaring war to fraud and manipulation and theft on the internet. If you don’t have war at the base, if there’s not a problem, it’s not remarkable. The solution won’t be remarkable. Wordproof, the timestamping tool, is just a vehicle to achieve that trusted web. The Trusted web is about problem space. Timestamping is a way to solve it in an open-source way. But it’s not about your saas solution. It’s really about the big idea. The regulators require. The big tech reward. The publisher and ecommerce platform doing it and being rewarded by being early. The consumer demanding it. It’s really the holistic place. So be a movement.”

This is why clarity around what you stand for – what you’re rebelling against can be so powerful. It drives the energy underneath your SaaS business.

So, can you explain this in a way that inspires people? Just imagine you’ll end up with the clarity that will turn your software business into a movement. And that leads to the next critical piece to avoid losing your edge with your SaaS product.

Reflection 5 – Differentiated value is created by solving the hard things

There’s so much to this point of ‘solving the hard things.’ For some reason ‘solving the hard thing’ is what we often push forward because “we’ll focus on the low hanging fruit” use case first.

But the low-hanging fruit for you is the low-hanging fruit for everyone. And that’s why so many saas providers have the challenge to stand out. Sure, they’re offering a different product, but value-wise they’re very alike. That won’t move the needle, and hence customers won’t move or upgrade. On the contrary, it will increase the churn rate and cancellation of hard-earned subscriptions.

It’s the typical mistake we make with the Minimum Viable Products we create – we don’t focus on creating capabilities that move the needle in a specific high valuable and critical area. No, we create a product that’s a copy of the existing approach, just in a different user interface.

And that’s why one of the traits that characterize Remarkable Software companies is ‘The art of creating new value possibilities’. It’s the art of understanding what truly moves the needle for your customers and then going deep on solving an expensive problem – by solving the hard things first. I’ve had many examples of this in my weekly podcast.

F.ex the story from Patrik Berglund, CEO of Xeneta. He solved the very tough problem of making commercial rates transparent in the Container Shipping industry. Not by asking the shipping companies (cause they’d never give away their secret), but by capturing contract after contract from their customers. It took them 2.5 years to reach 2 million data points, but then the network effect kicked in, and in the following 2 years they achieved +50 million data points. With that, they changed the way the industry buys and sells.

Another story is from Rebecca Clyde, CEO of Botco AI about creating value through chatbots. An extremely dense place to compete in. For heavily regulated environments (e.g. healthcare) the majority can’t be used though – so that’s what Rebecca and her team recognized, and solved. First of all through HIPPA compliance (and dealing with all the audits that flow from that), but beyond that by solving the specific problems for that specific industry and investing in providing deep workflow support to be valuable and viable.

And the list goes on. And the key takeaway: It’s not about your features. It’s about how well your features solve the true problem that keeps your customers up at night.

Did Rebecca or Patrik have an end-to-end suite from the start? No obviously not. But they started with the part that gave them an edge. An edge that’s hard to copy.  An edge that built trust with the early adopters. That created a fan base, and momentum was built from there.

Solving the hard thing will be noticed. Success follows from there.

The difference between a remarkable SaaS business and ‘the rest’ starts with having a different mindset.

When it comes to business software companies people keep talking about here are five things I constantly see:

  1. they’re determined on creating meaningful change
  2. they put customer value over company profit
  3. they prioritize the long-term impact over short-term shortcuts
  4. they prioritize quality over quantity
  5. they steer towards creating new value possibilities that move the needle, rather than incrementally improve what exits

It’s the red thread that I see across the +200 podcast interviews I’ve done in the past 4 years with tech-entrepreneurs across the world.

It’s the crucial factor that bonds the members of the tribe I run. Creating software solutions people keep talking about has nothing to do with your size, your budget, the number of people in your R&D department, or how well-known you are. To the contrary! These are all excuses for creating mediocre software. And that’s exactly what remarkable software companies see as their advantage to create something that wow’s their customers – something their customers would miss if it were gone.

It all starts with mindset.

The beauty is: It’s yours to take.

 

Additional resources to help you avoid losing your edge in B2B SaaS

The easiest way. Book a free call to explore if there’s a fit to do this together.

Otherwise – here are three other options

 

A daily email for B2B SaaS CEOs who want to end unpredictable traction.

About the author

Sales Pitch

Ton Dobbe is a former B2B software product marketer who's on a mission to save mission-driven SaaS CEOs from the stress of 'not enough' traction. He's the author of The Remarkable Effect, the host of the Tech-Entrepreneur on a Mission podcast, and writes a daily newsletter on the secrets to mastering predictable traction.